KEI TPP Briefing note 2015:1 Compulsory licenses on patents and the 3-step test

This is a briefing note prepared for TPP negotiators, addressing a single but important issue, the standards for issuing compulsory licenses in the TPP. A copy of the complete briefing note, which is available here, in (PDF) format, explains how the elimination of one article on exceptions from the TPP draft IP chapter has radically changed the standards for compulsory licenses, shrinking the space for actions that are necessary to address abuses of patent rights, or outcomes that are contrary to public policy.

This is a technically complicated but consequential issue. The following are a few quotes from the beginning and the end of the KEI briefing note:


KEI TPP Briefing note 2015:1 Compulsory licenses and the 3-step test
May 14, 2015

Main point: The TPP IP Chapter will limit the allowable exceptions to a patent holder’s exclusive rights, as they relate to compulsory licenses and other non-voluntary authorizations to use patents. At risk are the flexibilities in Article 31 of the TRIPS. This can and should be fixed.

The World Trade Organization (WTO) TRIPS agreement creates obligations to grant patents, and creates a set of exclusive rights associated with those patents.

The TPP proposes to expand the obligation to grant patents, requires extensions of patent terms beyond 20 years, expands the rights associated with a patent, and creates stricter obligations to enforce those rights.

Like TRIPS, the TPP also provides for exceptions to the exclusive rights of a patent. But some versions of the TPP IP Chapter text propose to limit the space for exceptions. In particular, the May 16, 2014 version of the TPP IP Chapter proposed significant and perhaps radical restrictions on the use of compulsory licensing of patents. In this version of the negotiating text, the TPP would limit compulsory licenses to cases where the compulsory license does not “unreasonably conflict with a normal exploitation of the patent,” a standard not used in the TRIPS for compulsory licenses.

[snip]
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Conclusion

The ability to grant a compulsory license on a patent is an important safeguard, and one that all TPP members will want to use, or threaten to use, in order to address abuses of patent rights or outcomes that are contrary to public policy goals. If the negotiators don’t fix the problems in the current text, the space for compulsory licensing will be much smaller, and it will be far more risky to issue compulsory licenses, and the threats to grant compulsory licensing will be much less effective.

It is irresponsible, and truly astounding, that TPP negotiators would introduce new standards for the use of compulsory licensing of patents in a secret negotiation, without a public debate or any effort to consider the impact of such a move, not only on the health sector, where the risks are obvious, but on the economy as a whole, which is dealing with the consequences of patent thickets in many different areas.

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